{"id":228,"date":"2005-11-16T19:38:56","date_gmt":"2005-11-17T02:38:56","guid":{"rendered":"http:\/\/lefsetz.com\/wordpress\/index.php\/archives\/2005\/11\/16\/the-sony-debacle\/"},"modified":"2005-11-16T19:40:47","modified_gmt":"2005-11-17T02:40:47","slug":"the-sony-debacle","status":"publish","type":"post","link":"https:\/\/lefsetz.com\/wordpress\/2005\/11\/16\/the-sony-debacle\/","title":{"rendered":"The Sony Debacle"},"content":{"rendered":"<p>Can you say PERRIER?<\/p>\n<p>I bet you most people under thirty can&#8217;t.\u00c2\u00a0 Because they don&#8217;t remember when water was synonymous with this brand.\u00c2\u00a0 Before traces of benzene contaminated the product and the company&#8217;s water was recalled from the shelves.\u00c2\u00a0 AFTER the French enterprise said it was no big deal, that a little benzene wouldn&#8217;t hurt you, that it wasn&#8217;t their fault.<\/p>\n<p>Sony BMG has been irreparably harmed.\u00c2\u00a0 The whole MUSIC business has been irreparably harmed.\u00c2\u00a0 By the inane actions of ignorant people under the moniker of saving the music.<\/p>\n<p>You want to save the music?\u00c2\u00a0 Make stuff people want to own for decades.\u00c2\u00a0 And sell it to them in a way they want to listen to it.<\/p>\n<p>Now Congress isn&#8217;t even going to pay attention to the record labels when they cry they need protection.\u00c2\u00a0 Not when their constituents&#8217; computers have been compromised by Sony&#8217;s rootkit software.\u00c2\u00a0 Elected officials walk away from crises.\u00c2\u00a0 They only want to be involved if they can grandstand to great effect.\u00c2\u00a0 Defending the labels is not going to benefit them with the public.\u00c2\u00a0 And, they get more money from Microsoft and the Silicon Valley players than they do from these old wave mafia-type operators in the music industry.<\/p>\n<p>How did things go so horribly wrong?<\/p>\n<p><strong>1.<\/strong> The major labels developed a sense of entitlement.\u00c2\u00a0 They believed that sales could never go down, that people NEEDED music, that MTV would break acts forevermore.<\/p>\n<p>But Tom Freston told me videos have moved to the Web.\u00c2\u00a0 You might decry the lack of music on MTV, but the station can&#8217;t compete with video on demand on the Web.\u00c2\u00a0 Which is why MTV&#8217;s beefed up content on ITS Website.\u00c2\u00a0 Albeit late compared to Yahoo!<\/p>\n<p>The Web is like cable TV.\u00c2\u00a0 It&#8217;s about niche product.\u00c2\u00a0 No act dominates when the public has choice.\u00c2\u00a0 Therefore, the concept of selling ten million copies of one album has gone out the window.\u00c2\u00a0 It&#8217;s got NOTHING TO DO with ripping, burning or stealing.\u00c2\u00a0 You just can&#8217;t dominate the public consciousness the way you used to.\u00c2\u00a0 But rather than face this reality, and retool for a new environment, the labels, in a parody of their customers two decades before, claimed I WANT MY MTV!<\/p>\n<p><strong>2.<\/strong> Boy bands were a mania.\u00c2\u00a0 Sold to the baby boomlet.\u00c2\u00a0 To believe this would go on forever is delusional.\u00c2\u00a0 But rather than build on what the boy bands represented, which was great songs, with melodies and hooks, sung by skilled singers, the labels just tried to sell this aging demographic hip-hop and thrashing hard rock.\u00c2\u00a0 It would be as if AC\/DC came after the Beatles.\u00c2\u00a0 And, not being able to tolerate the new sounds the majors were purveying, the youngsters went back to the CLASSICS!\u00c2\u00a0 Everything from Led Zeppelin to Chicago. <a title=\"'Hey Jude'? Duude.\" href=\"http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2005\/11\/13\/AR2005111301291.html\" target=\"_blank\">&#8216;Hey Jude&#8217;? Duude.<\/a><\/p>\n<p>The labels were under the illusion that they could sell these albums to kids the way they sold them to their parents.\u00c2\u00a0 Over time, one by one.\u00c2\u00a0 But ravenous kids wanted them all NOW!\u00c2\u00a0 So, they just downloaded everything P2P.\u00c2\u00a0 They were NEVER going to buy the complete set of the Doors.\u00c2\u00a0 But, at a low incremental price, they went for it.\u00c2\u00a0 Unfortunately, there WAS no price!\u00c2\u00a0 The new paradigm is more people with much more music at a low price.\u00c2\u00a0 Sure, Rhapsody and Napster deliver this to a degree, but YEARS after ownership of MP3s became de rigueur, and in a format incompatible with the market dominating iPod.\u00c2\u00a0 Believe me, if they started mass-marketing automobiles running on vegetable oil today, they wouldn&#8217;t dominate tomorrow, because there&#8217;s no INFRASTRUCTURE!\u00c2\u00a0 No vegetable oil stations on every corner.\u00c2\u00a0 Furthermore, vegetable oil cars run better than portable subscription software\/hardware.<\/p>\n<p><strong>3.<\/strong> Ignorance of technology.<\/p>\n<p>To believe that you can keep people buying albums on CDs is as delusional as believing that people should continue to purchase music on wax cylinders.\u00c2\u00a0 Why is it that after a history of progress, killing old formats as new technologies appeared, NOW the industry wants to stay in one place and hold on to the past?\u00c2\u00a0 Didn&#8217;t albums blow up the business?\u00c2\u00a0 Didn&#8217;t CDs blow up the business?\u00c2\u00a0 Isn&#8217;t it RATIONAL to believe that the NET would blow up the business?\u00c2\u00a0 But instead, you&#8217;ve got Sony and the rest of the major players trying to SHRINK the business back to what it once was, by limiting use of their product.\u00c2\u00a0 Sales were at their height during the heyday of the original Napster.\u00c2\u00a0 If lawsuits and copy protection were working, wouldn&#8217;t sales be HIGHER?<\/p>\n<p>And speaking of sales&#8230;<\/p>\n<p>The labels are under the illusion that every track traded and every track ripped and burned is a lost sale.\u00c2\u00a0 This is HOGWASH!\u00c2\u00a0 Nobody was going to buy these records.\u00c2\u00a0 I&#8217;ve known about Argent&#8217;s &quot;Liar&quot; for thirty years and NEVER purchased the album, because I didn&#8217;t want to pay in the neighborhood of ten bucks for one track.\u00c2\u00a0 But, I took the song IMMEDIATELY from Napster.\u00c2\u00a0 If only the companies had conspired to charge me three extra bucks at the ISP level for this privilege, and had divided the ultimate monies along the ASCAP\/BMI model, then we&#8217;d ALL be happy.<\/p>\n<p>According to the &quot;New York Times&quot;, the CD recall is going to cost Sony BMG TENS OF MILLIONS OF DOLLARS!\u00c2\u00a0 <a title=\"CD's Recalled for Posing Risk to PC's\" href=\"http:\/\/www.nytimes.com\/2005\/11\/16\/technology\/16sony.html\" target=\"_blank\">CD&#8217;s Recalled for Posing Risk to PC&#8217;s<\/a>\u00c2\u00a0 Take THAT hit to the bottom line.\u00c2\u00a0 Wouldn&#8217;t it have been wiser to figure out how to charge people for their present uses rather than try to eliminate them?\u00c2\u00a0 Knowing that all that ripping, burning and trading illustrates DEMAND?\u00c2\u00a0 FEED demand, don&#8217;t eviscerate it.<\/p>\n<p>But worse than the cash to replace the CDs is the loss of good will.\u00c2\u00a0 From this, I doubt the major labels will ever recover.<\/p>\n<p>You&#8217;ve got &quot;Fortune&quot; saying the Sony BMG merger was flawed in conception.\u00c2\u00a0 <br \/><span class=\"TopStoryHead\"><a title=\"Music Lessons\" href=\"http:\/\/www.fortune.com\/fortune\/ceo\/articles\/0,15114,1129464,00.html?promoid=yahoo\" target=\"_blank\">Music Lessons<\/a><\/span> <\/p>\n<p>You&#8217;ve got Thomas H. Lee losing its shirt on Refco.<\/p>\n<p>Suddenly, all these powers look extremely vulnerable.\u00c2\u00a0 Like maybe everything they&#8217;ve been telling us has been based on flawed evidence.\u00c2\u00a0 I mean do you trust the business sense of people who PERPETRATED the rootkit debacle?\u00c2\u00a0 FIRST they diverged from the CD standard.\u00c2\u00a0 Not realizing that standardization insured the success of the format.\u00c2\u00a0 Not looking back at corporate history and seeing that the non-standard Betamax ultimately failed.\u00c2\u00a0 THEN, they altered operating systems.\u00c2\u00a0 Which is akin to identity theft in the world of tech.\u00c2\u00a0 And what&#8217;s worse, they had no idea they were doing this.\u00c2\u00a0 They just trusted their tech partner in the U.K.\u00c2\u00a0 Isn&#8217;t this like the Administration trusting Chalabi?<\/p>\n<p>Where does the buck stop?<\/p>\n<p>It should stop with Andy Lack.\u00c2\u00a0 Who should make a public announcement.\u00c2\u00a0 Do a mea culpa.<\/p>\n<p>But like our President, Andy Lack can&#8217;t be wrong.\u00c2\u00a0 And it&#8217;s all about HIM, and HIS career, fuck the public.<\/p>\n<p>And the man steering the strategy, Mitch Bainwol, TRAINED in the Republican\/Rovian world.\u00c2\u00a0 Check the stats for the public&#8217;s belief in the veracity of the Administration recently?\u00c2\u00a0 Over 50% think Bush is untrustworthy.<br \/><a title=\"USA TODAY\/CNN GALLUP POLL\" href=\"http:\/\/www.usatoday.com\/news\/polls\/2005-11-14-poll.htm\" target=\"_blank\">USA TODAY\/CNN GALLUP POLL<\/a>\u00c2\u00a0 <br \/>How many people think the major labels are trustworthy TODAY?<\/p>\n<p>Actually, the major labels haven&#8217;t been trustworthy for eons.\u00c2\u00a0 But, there was no single event for the public to rally around, place its hat upon.\u00c2\u00a0\u00c2\u00a0 The rootkit debacle is the music industry&#8217;s Katrina.\u00c2\u00a0 Doesn&#8217;t matter what happens now.\u00c2\u00a0 They&#8217;ve lost the public&#8217;s confidence.\u00c2\u00a0 It didn&#8217;t happen overnight.\u00c2\u00a0 It&#8217;s been brewing for years.\u00c2\u00a0 Starting with one good track on an overpriced album.\u00c2\u00a0 It&#8217;s not the public that&#8217;s ripping off the labels, it&#8217;s the labels that are ripping off the public.\u00c2\u00a0 And now everybody knows it.<\/p>\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>Can you say PERRIER? I bet you most people under thirty can&#8217;t.\u00c2\u00a0 Because they don&#8217;t remember when water was synonymous with this brand.\u00c2\u00a0 Before traces of benzene contaminated the product and the company&#8217;s water was recalled from the shelves.\u00c2\u00a0 AFTER the French enterprise said it was no big deal, that a little benzene wouldn&#8217;t hurt [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[],"class_list":["post-228","post","type-post","status-publish","format-standard","hentry","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-3G","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/comments?post=228"}],"version-history":[{"count":0,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/228\/revisions"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}